2012 cities-of-opportunity

London moves up markedly but New York shows continued strength
London advances four spots from last year to a virtual lock with New York at the top and finishes first in city gateway, a new category that measures international connectivity. New York performs well across the board but wins no individual category, showing diverse strengths. Paris rises four spots to number four this year, coming in first in demographics and livability and narrowly second to London in city gateway, showing that despite the eurozone’s continuing economic instability, The long-term investment that builds a great urban center also lends resilience to weather the storms. Overall, relative bands of performance remain similar to 2011.

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Looking to the future of 27 cities at the centerof the world economyRobert MoritzChairman and Senior PartnerPricewaterhouseCoopers LLPKenneth I. ChenaultChairman and CEOAmerican Express Co.Co-chairmanPartnership for New York CityTerry J. LundgrenChairman, President andChief Executive OfficerMacy’s Inc.Co-chairmanPartnership for New York CityYours sincerely,In this fifth edition of Cities of Opportunity,PwC and the Partnership for New York Cityagain examine the current social and economicperformance of the world’s leading cities. Wealso add a future dimension that probes theshape of city economies to come. Together,looking at 2012 results and ahead towardthe possibilities in 2025, we seek to providea realistic framework for thought and actionbeginning with 27 of the world’s most signifi-cant cities—on one hand, the engine of themodern global economy and on the other,the heart of much of our shared culture.It is precisely because of the importance ofcities and the need to deepen knowledge ofurban issues that we undertake the study. Theeffort to question and understand where citiesare and where they are headed benefits allof us in a world urbanizing like never before.This includes the officials and policymakerssetting the course, businesses invested in citywell-being, and the citizens who build theirlives in thousands of city neighborhoods world-wide, rich or poor, picturesque or prosaic.Statistics tell some of the story: Today, our27 cities account for nearly 8 percent of worldgross domestic product (GDP) but only2.5 percent of the population. By the quarter-century, they will house 19 million moreresidents, produce 13.7 million additionaljobs, and generate $3.3 trillion more in GDPif population follows UN projections andeconomic progress remains modest. As growthoccurs, the symbiotic relationship betweenEast and West is likely to continue: Emergingcities will skyrocket in jobs and population,but developed cities will retain the spendingpower, as well as the consumer and corporatedemand, to drive growth. One side will stillneed the other to move ahead.Meantime, our analysis shows that eachcity represents an economic ecosystem in itsown right, built around mutually supportiveeconomic and social strengths as well as anintertwined fabric of jobs—not just the profes-sionals in bright skyscrapers but all those whoturn the lights on every morning from retailersand teachers to nurses and cooks, from crimefighters to street cleaners. Maintaining healthybalance is a cornerstone of urban resilience.Our jobs analysis also reveals surprisingpatterns, vulnerabilities, and dependencies,as cities journey toward 2025 with more thana few clouds on the horizon. To come to gripswith some of this uncertainty, “what if”scenarios test the future of our cities underdifferent conditions. The clouds hold silverlinings for some cities in terms of greateremployment and wealth. But storms roll in forothers. The differing “what if” scenarios stressthe need for flexible thinking simply to dealwith foreseeable changes, not to mentionthe unexpected turns.To flesh out the empirical picture, we spoketo a broad scope of leaders on issues from thelong range and philosophical to the practicaland immediate. This includes E.O. Wilson, thenaturalist; Bill Bratton, former New York andLos Angeles head of police; Narayana Murthy,founder of Infosys; Andrew Chan and PeterChamley, two leaders of the global engineeringfirm Arup, based in Hong Kong and London,respectively; Wim Elfrink, Cisco’s head ofSmart + Connected Communities; and DavidMiller, former Toronto mayor and WorldBank special advisor on urban issues.All in all, we hope to provide insight intoan urban world in which all of us are “in ittogether,” making as strong a case for jointthought and action among cities as there isfor self-interest and competition.

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2 | Cities of Opportunity | PwCBeijingSeoulTokyoShanghaiHong KongKuala LumpurSingaporeSydneyMumbaiAbu DhabiIstanbulJohannesburgBerlinParisMilano Paulow York61311614109321232427621995 10 15ShanghaiIstanbulTorontoChicagouala LumpurSydneyarisSingaporeTokyoMoscowSeoulNew YorkMexico CityHong KongMadridLos AngelesBuenos AiresBerlinJohannesburgLondon São PauloMumbaiPopulation in millionsValue of outputmerging 2012 2025What makes a city tick?“Justice remains the appropriate name for certain social utilities which are vastly moreimportant, and therefore more absolute and imperative, than any others,” John Stuart Millwrote in Utilitarianism in 1861. He added, “education and opinion, which have so vast a powerover human character, should so use that power to establish in the mind of every individual anindissoluble association between his own happiness and the good of the whole.” Many of thosewe spoke with this year in developing Cities of Opportunity agree. The foundations of healthycities remain rule of law and safety and security today, as well as strong education to fosterthose qualities for future generations.24Overview The city tomorrowProjecting urban possibilities to 202519From butcher to baker tomemory-stick makerProjecting urban trends to2025 in jobs, production,and population10How the cities rankLondon moves up,Asian cities improve14The study’s methodologyRefinements continue ona solid foundation28The 2025 baseline scenarioJobs in business services,wholesale and retail, andmanufacturing anchor the cities22The shape of cityeconomies to comeMutual self-interest unitesdeveloped and developing cities24The ants, the man, andthe cityE.O. Wilson views city lifethrough the lenses of natureand reason30Where the jobs areA detailed look at six big ortelling employment sectors34“What if” technologicalunemployment dawns… in a slow growth,urbanized world? And fourother scenarios that exploreunexpected directions2316 We’re quickly coming to an agreement as a nation and asa world—that we really have to improve education systems.We need far better methods of teaching. We need better incentivesfor teachers, and especially to include education in science andtechnology because we are now entering a techno-scientific world.

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Partnership for New York City | Cities of Opportunity | 3The city todayResults for 201242Intellectual capitaland innovationGenerating the skills thatgenerate growth50Technology readinessThe competition for digitaladvantage continues to intensify56Transportationand infrastructureA major revision focuseson internal mobility44City gatewayA new indicator measuresa city’s global connections46Booting up holisticsustainabilityWim Elfrink discussesCisco’s and his own passageto urban India51Health, safety and securityFrom Aristotle to Brattonto Chan, securing citizens’well-being is key52Bill Bratton transformedurban law and order… in New York and Los Angelesand explains how to achievethat fundamental priority onthe toughest city streets58The ins and outs, overs andunders, of a great city… can be engineered for efficiency,Peter Chamley of Arup explains46 5852For the average person in adeveloping city, the mostimportant factor is safety, health,and security. Efficiency is alsoimportant—[the] abilityto get around efficiently isprobably second in importanceonly to safety.What we often lack now areprojects having a championwho will get hold of themand make it their sole aimto deliver them.Health, safety, and security is the number one requirement for acity. If you don’t have security, you don’t have health and safety,and all the other pillars that support democracy will weaken,including education and the economy. If you have a shakyplatform, they are all going to be shaky.

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4 | Cities of Opportunity | PwC62Sustainability and thenatural environmentWeighing the effectivenessof public policy68Andrew Chan ofArup engineers seesemerging cities… through the prism ofresilience and sustainability64Cold comfort comesin Toronto… from civility and economicbalance, former mayor DavidMiller explains67Demographics and livabilityWe know it when we seeit, despite a certain je nesais quoi74Ease of doing businessCompetitive cities knowhow to stay competitive72Economic cloutAsia rises, but we’ll alwayshave Paris76CostComparative advantagescan keep advancedeconomies competitiveThe city todayResults for 20126864For the average person in a developing city, the most importantfactor is safety, health, and security. Efficiency is also important—and that relates to transport or connectivity and how you laythings out through good urban planning. This ability to getaround efficiently is probably second in importance only to safety.To understand a city’s quality of life, see if you can walk aroundat any time of day or night. You don’t want to be walking arounda city at 11 at night if it’s not interesting and exciting, and that’sa test of a neighborhood and a city as a whole.

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Partnership for New York City | Cities of Opportunity | 583Forecast of investmentspending… shows tremendous needin emerging megacities84Narayana Murthyof Infosys links… India’s urban future to thepower of private enterprise,leadership, governance,and transparency79Smaller world, bigger citiesEmerging cities will need togrow, and invest, even moreto enhance their citizens’quality of life88A tale of three citiesAthens, Dublin, and Dubaiweather the Great Recessionin different ways92Key to the variablesUnderstanding the datapointsthat underpin the studyCities at the edgeMegacities, megachallengesReferenceunicipal population data used in the main Cities of Opportunity comparison.ShanghaiarachiDelhiKolkataDhakacowTokyoOsakaJakartaShenzhenGuangzhouManilalChongqingBeijing83On the webSee www.pwc.com/cities forinteractive modelers; videos,podcasts, and full-lengthversions of the interviews;detailed data definitionsand sources84There is terrible corruption and little public security in my cityin Bangladesh. ... But what can we do? We are not politiciansor powerful people. We just want to survive. ... That’s whypeople come to New York from all over the world. There is lawand order. —New York cab driverTo bring prosperity to thevast majority of Indians,we need to enhance ourgovernance system, enhanceour transparency andaccountability, combatcorruption, and enhanceour infrastructure.

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6 | Cities of Opportunity | PwCHighlightsCities of Opportunity 2012 covers a broad range of findingsand ideas. Here is a selection of notable ones.A virtuous circle of socialand economic strengthsOur thesis remains that a city’s healthy growthand long-term resilience depends on “positivereinforcement in the network of economic andsocial development,” to borrow from scientistE.O. Wilson. When great quality-of-life factorslike schools, healthcare, housing, and safetyare balanced with strong businesses and solidinfrastructure, the formula is right to pave citystreets with optimism if not yet gold.“Another factor that makes things hopeful iswhat chemists call autocatalytic reactions,”Wilson adds. “That is, when you get a productcreated by putting certain ingredientstogether, the product itself becomes a catalyst.The reaction speeds up and you get more andmore products like that, and it just takes offexponentially. You won’t get it quite in a socialsystem, but you could get something like it.”If there’s bad news for cities it’s the sameas in science: “One of the hardest things todo sometimes is to get a reaction started.”Size does matter. But is a big city lightenough on its feet to dance?Continuation of the “urban renaissance”is no guarantee in difficult economic times.Uncertainty seems to have replaced the expec-tation of return to a steady state of economicgrowth, and signs of potential transformationcan be seen in everything from jobs to theweather that greets us every morning.No matter the size, wealth, or advancementof modern cities, flexibility will be thekeyword for planners and policymakersconsidering the future.It doesn’t take a perfect storm to scuttlecity futuresLooking at a range of uncertainties, we testedwhat it would mean for cities if technological,economic, and sociopolitical forces go in thewrong direction and hamper economic healthand employment growth between now and2025—a realistic enough scenario given thestubborn failure of jobs to return and hints ofbroad technological transformation replacingworkers without the right skills. Not unexpect-edly in this “what if” scenario, employmentand GDP growth fall across our spectrum of27 cities. Beijing, Shanghai, and São Paulolose the most jobs, but London and Tokyofollow close behind, showing that neitherdeveloped nor developing cities escapesweeping transformation. London and Sydneysacrifice more annual GDP than any cityexcept Johannesburg—all suggesting theold adage, plan for the best but prepare forthe worst.“What if” smart cities prevail?The answer is anything but a no-brainer.London, Tokyo, New York, Seoul, and Parisfare best in employment growth if citiesprosper based on knowledge as well astechnological and travel connections—seemingly the right stuff for the modernworld. Overall, our 27 cities lose 4 millionjobs compared to the 2025 baseline projection.Perhaps counter-intuitively, this occursbecause greater productivity will cut the needfor workers. However, higher trade mightreasonably accompany such a scenario andgenerate even more jobs than productivityshaves away.If we follow our urban bliss, Londonand Sydney lie on the yellow brick roadIn Cities of Opportunity, our measures ofhealth, safety and security, demographicsand livability, and sustainability representa good proxy for quality of life—the urbancharacteristic for which many professionalsand businesses appear to be searching. If thatproves correct and more of us follow our urbanbliss, London, Sydney, Singapore, Paris, andBerlin benefit the most in terms of jobs gainedby 2025; Stockholm the most in terms ofadditional GDP. Today’s developing citieslose the most jobs and wealth.London moves up markedlybut New York shows continued strengthLondon advances four spots from last year to a virtual lock with New York at the top and finishesfirst in city gateway, a new category that measures international connectivity. New York performswell across the board but wins no individual category, showing diverse strengths. Paris rises fourspots to number four this year, coming in first in demographics and livability and narrowly secondto London in city gateway, showing that despite the eurozone’s continuing economic instability,the long-term investment that builds a great urban center also lends resilience to weather thestorms. Overall, relative bands of performance remain similar to 2011.Beijing and Shanghai advanceThe two Chinese cities move to the top 5 in economic clout and city gateway along withLondon, Paris, and New York. Balanced progress across a range of social and economicindicators represents the next step for Shanghai and Beijing in transforming exceptionalgrowth into sustainable performance at the top tier of world capitals.

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Partnership for New York City | Cities of Opportunity | 7When it comes to the share of cityemployment, the biggest gorillas inthe room throw their weight arounddisproportionately (for better or worse)Financial and business services, manufactur-ing, wholesale, and retail sectors anchor manycity economies in 2012. The first two accountfor as much as a third of jobs. That includesShanghai, where one in three workers is inmanufacturing, and Milan, Paris, London,Beijing, San Francisco, and Stockholm, wherefinancial and business services predominate.Wholesale and retail accounts for more thanone in five jobs in Hong Kong, Kuala Lumpur,Moscow, Mumbai, Mexico City, and Istanbul.While these profiles may be changing—forinstance, as emerging cities begin to diversifyaway from reliance on manufacturing—over-dependencies and imbalances can leavecities vulnerable.Surf (with the pack) or (defend your) turf?The question of competing or collaboratingwithin and among communities is as old asthe seven hills of Rome. Today’s cities need toblend some of each strategic outlook into theirplanning. On one hand, cities can benefit byaligning interests and seeking joint action ina world urbanizing faster and creating morefunding needs than cities are empowered toaddress. Yet, cities are where the buck stops interms of the need to get results. Competitionwith other cities, whether for a new factoryor new museum, is a fact of life.As scientist E.O. Wilson told us: “The solutionto our problems is not to expect completeharmony among cooperating people, but torealize that group distinctions and groupcompetition and individual-level competitionwithin groups is just the way we are. What wereally need to do is try to find ... a harmonioussolution. ... It’s that ferment of the center,between the two opposing impulses, whichmakes us creative.” Cities like San Francisco,with its mutually supportive ties to SiliconValley, show the dividends of collaboration.Cities of invention ... or reinventionHistory shows the capacity of cities to buildfrom the ground up, as many emerging citiesare doing now, and to rebuild from rubble,as many developed cities have done after war.Success comes from collective will and theability to align economic, governmental, andsocial forces. Where there’s a common will,there’s a way forward.Growing cities with growling appetites forcapital investmentTo keep up with the great gains in populationand employment by quarter-century, someemerging cities will have to invest significantly.Shanghai and Beijing will need to invest whatrepresents 42 percent of their GDP just tosatisfy forecast growth from 2012 to 2025. ForMumbai, it’s 35 percent. London, by contrast,only requires 17 percent and Stockholm 19percent to meet the forecast of investmentspending relative to growth.Most happy cities are alike ... but everyunhappy city is unhappy in its own wayAthens, Dublin, and Dubai each endured thesame economic crisis. But each climbed outof the hole or stayed mired in their problemsin their own way—illustrating the extent towhich it is more the differences rather thanthe commonalities that distinguish economicbreakdown and recovery in a city.Make my city healthy, wealthy, and wise(not necessarily in that order)Most of the leaders we spoke to emphasize theneed for a safe and secure city as the keystoneof a healthy community. After that, good edu-cation is most widely cited as a springboardfor future success. In fact, our own Cities ofOpportunity analyses have shown that goodhousing correlates in a highly positive waywith the attributes of an economically strongcity. They may be cold, dark, or far from themadding crowd, but Stockholm, Toronto, andSydney again demonstrate balanced success ineducation and health, safety and security.Can the champions rest their feats?The Olympic effort may be ended in London,but cities worldwide require leaders with thevision and drive to realize transformative proj-ects like Baron Haussmann in 19th-centuryParis, Daniel Burnham of Chicago at the turnof the 20th century, and Robert Moses in mid-20th century New York. While their programswere sometimes criticized, they “certainlydelivered,” to paraphrase Peter Chamley,head of infrastructure at Arup. Many creditSingapore’s modern planners with that visionto see and build.Chamley, for his part, notes a recent triumphin his home city. “The construction industrycan look at the Olympics with pride. Wonder-ful facilities have been delivered very quicklyand on budget. ... It has been a great success inregenerating that part of London.” But manyother developed and developing cities facehigh hurdles including bureaucratic delay,political gridlock, and systemic corruption.To recall the principals behind Burnham’slegacy, which continues to benefit Chicagoans:“Make no little plans, for they have no magicto stir men’s blood. ... Make big plans. Aimhigh in hope and work.”Learn moreSee www.pwc.com/cities for interactive modelers,videos, podcasts, and full-length versions of theinterviews; detailed data definitions and sources.

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Partnership for New York City | Cities of Opportunity | 9A cityless man is like “a solitary piece incheckers,”1simply out of the game, Aristotlewrote 2,400 years ago, putting urban life ina clear social context. Then, the polis literallymeant a free city that made laws, sometimeswars, and on a deeper level signified the com-munal existence under the rule of moralitythat only humans are capable of living.2Beinga citizen was a badge of honor for the 30,000or so politai among Athens’s 140,000 or somen, women, children, and slaves.Today many more of us live in cities. CentralAthens houses over 1 million people, withabout 3.8 million in the metropolitan area.Citizenship embraces more than just men.And the birthplace of democracy is now betterknown as the epicenter of the eurozone crisis.(See “A tale of three cities,” page 88.)However, the foundations of urban life remainthe same. City dwellers still prize living underthe rule of law and strive to develop the rich-est quality of social and economic life theycan. How to govern justly and well—howbest to move the city ahead—is still a point ofdebate. In ancient Greece, Aristotle’s biggesttheoretical rival on the topic, Socrates, hisimmediate forbear and self-described “gad-fly” of the state,3favored governing by expertmanagers rather than the democratic citizenryhe viewed as a herd. Today, political debatesaround the world appear equally as difficult(often lacking the intellectual rigor Socratesand Aristotle brought to the party).With that look back for context, Cities ofOpportunity notably looks ahead this yearto frame city futures around probable direc-tions and unforeseen turns in the road at acrucial time. The Great Recession continues tohamper mature city governments. Stubbornjoblessness adds a serious problem. Emergingcities are faced with a flood of immigrantsand a pressing need to build adequate roads,water, waste, and energy systems, schools,and hospitals to accommodate growth. Bothmature and emerging cities depend on eachother to balance their economies. And “only byacknowledging our extreme interdependencewill we make the fishbowl effect work forhumanity rather than against it,” in the wordsof Li Congjun, head of China’s official newsagency.4Big uncertainties hang over the entirepicture from destabilizing climate change topolitical and social tension to technologicaltransformation. Realistically, continuationof the 20-year “urban renaissance” cannot betaken as any more inevitable than the longclimb in house prices that crashed to set offthe economic crisis. A considered look at thefuture is in order.The report adds an entire section thatprojects from our 2012 results the sectoralemployment, production, and population ofour 27 cities in 2025. We examine what mightoccur if different city characteristics provemore or less important in attracting invest-ment and driving growth, and how cities willbe affected if the world economy changescourse. We also veer away from our 27-citystudy group to examine those cities at theA street in the Beaubourg area of Paris asseen from the Pompidou Center.1 Politics, I.I.9-10 as translated by I.F. Stone in The Trial ofSocrates, 1989, Anchor Books, page 98.2 The Trial of Socrates, I.F. Stone translating on page 10 fromPolitics 2.1.9-10, “It is man’s ‘special distinction from other animalsthat he alone has the perception of good and bad and of the justand the unjust.’ It is this intrinsic sense of justice that gives man hissocial instinct, his ‘impulse’ as Aristotle calls it, to a social life, andmakes man ‘a political animal in a greater measure than any beeor any gregarious animal.’” Interestingly, E.O. Wilson, a renownedscientific observer and thinker today on sociobiology and humannature, parallels Aristotle in speaking to Cities of Opportunity (seepage 24), as do a range of others we interviewed including ex-NewYork and Los Angeles head of police Bill Bratton on the primacyof justice in community-building.3 As related principally by Plato, as well as Xenophon andAristophanes, in that Socrates left no writings of his own.4 “Frictions are hardly avoidable, but what’s important is for thetwo sides to handle their differences through coordination basedon equality and mutual understanding. Only by acknowledgingour extreme interdependence will we make the fishbowl effectwork for humanity rather than against it.” Li Congjun, presidentof Xinhua News Agency, China’s official press agency, wrotein The New York Times, July 18, 2012, in “Rebalancing theGlobal Economy.”London moves up overall, Asian cities moveahead in some areas, and the futuremoves in patterns we seek to understand

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10 | Cities of Opportunity | PwC189 91 101 97198 66 109 116194 65 99 89205 89 103 119191 93 92 107150 71 103 71122 80 114 103170 81 92 109167 80 107 93179 56 66 114147 48 95 101171 79 59 91137 96 109 61119 44 99 81131 34 86 9582 49 71 3566 41 80 5599 48 80 38109 54 73 1982 24 93 4228 93 4387 28 89 936345 33 67 2449 23 32 4660 22 54 1648 27 70 25184 79 99 96Intellectual capitaland innovationTechnologyreadinessTransportationandinfrastructureHealth, safetyand security16131186New YorkLondonTorontoParisStockholmSan FranciscoSingaporeHong KongChicagoTokyoSydneyBerlinLos AngelesSeoulMadridMilanBeijingKuala LumpurShanghaiMoscowMexico CityAbu DhabiBuenos AiresIstanbulJohannesburgSão PauloMumbai2120191817151412109754321222324252627How the cities rankfulcrum of change today: first, the megacitiesmushrooming especially throughout theemerging world; and second, Athens, Dublin,and Dubai, three cities that suffered throughand managed the economic crisis, each inits own way.We chose to extend our investigation into thefuture because this seems a natural time tostick our finger into the air and gain a sense ofthe direction of things to come. After decadesin which overall growth led to a common,often unspoken expectation of return tohealthy economic equilibrium, we’re now at amoment when a few trends indicate a changein the norm, if not advancement to a newplateau in the industrial/information revolu-tion. Economic growth remains slow in manyplaces and municipal budgets strained inmature cities. More puzzling, employmentrefuses to bounce back to anything near levelsbefore the boom years that preceded the GreatRecession. Joblessness, especially amongthe young, persists at high levels. Scientificadvances could be playing a role as “techno-logical unemployment” finally dawns longafter Keynes coined the term.Urban immigration levels never known before(certainly not beyond New World melting potslike New York and Chicago or Buenos Airesand São Paulo) threaten the social and politi-cal fabric of many cities. When factors likerising income inequality and pervasive socialnetworking are folded in, cities can become avolatile mix. And ultimately, while cities maylack the power or funding of national govern-ments, they are the ones that must act asall these forces play out in their streets,businesses, and homes. As David Miller,former mayor of Toronto, told us, “Mayorsoften don’t have time to wait, and they arevery practical. Mayor LaGuardia [of New Yorkin the 1930s] quite famously said ‘there isno Republican or Democratic way to pick upgarbage.’ You become less ideological. ...City governments are good at action.”Positive forces are at work also. These includethe upside potential of globalization and theincreasing attraction of cities to travelers ofall sorts, the expanding growth of urbanservice sectors supported by rising demandand higher levels of education and training,opportunities to build new or retrofit crum-bling, old infrastructures, and, of course,the promise that innovation offers in urbanclusters. (See The city tomorrow, pages 18-39.)In terms of today, the study finds that despitea revision of many of our data variables andreorganization of indicator categories, relativebands of performance generally continue. Yetnoteworthy changes do occur.London moves up from number six last year,doing very well in many categories and finish-ing narrowly as the number-two city behindNew York. The top third is rounded out byToronto, Paris, which advances four spotsfrom 2011, Stockholm, San Francisco,Singapore, Hong Kong, and Chicago.Asian cities perform very well in a number ofcategories. Shanghai and Beijing move upthe ratings, performing in the top five ineconomic clout and city gateway, the latter anew indicator that measures global attractive-ness and accessibility. Four of the five leadersin inner-city transportation and infrastructuresit in Asia—Singapore, Seoul, Tokyo, andHong Kong—versus last year when all fiveleaders were in America or Europe. Externalcity connections like air traffic also weighedon the scoring. In demographics and livability,Paris moves up 7 spots from the mid-rankslast year to number one with the indicator cat-egory recast in 2012 to stress livability. Paris,

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Partnership for New York City | Cities of Opportunity | 11Each city’s score (here 1,112 to 515) is the sum of its rankings across indicators. The city order from27 to 1 is based on these scores. See maps on pages 16–17 for an overall indicator comparison.HighLowMediumHighest rank in each indicatorLondon, and New York also narrowly bunchat the top of economic clout between Beijingand Shanghai, first and fifth, respectively.Our first detailed look at current employ-ment, population, and production in our 27cities shows them producing 8 percent of theworld’s wealth in 2012 despite being home toonly 2.5 percent of its population. Three majorjob sectors—business and financial services,wholesale and retail, and manufacturing—dominate many city economies. The latter twocategories are particularly large in emergingcities. Business and financial services whengrouped together account for over a thirdof jobs in Milan, Paris, London, Beijing, SanFrancisco, and Stockholm. New York leadsthe world with 16 percent of employment inhealthcare. And a third of Shanghai’s jobs liein manufacturing, even as that city is expectedto migrate more toward the service sector.Looking ahead toward 2025, our baselinescenario estimates that an additional 19million will live and 13.7 million work inour cities. They will generate an additional$3.3 trillion gross domestic product (GDP)—all predicated on a world of modest growth.Population and employment will surge in citieslike Beijing, Shanghai, Mumbai, Istanbul, andSão Paulo, with the pack of mature cities far83 119 182 70 59 121101 98 175 89 75 6986 120 137 58 82 14388 83 161 86 73 55101 76 154 86 76 8559 99 198 78 78 10869 110 202 71 75 9972 67 158 93 67 8858 92 156 51 59 111103 90 147 54 78 7791 68 135 124 74 7279 59 160 99 65 9258 81 146 108 37 8282 76 136 96 55 11589 90 111 71 51 6965 125 80 79 48 13555 64 154 106 53 8744 118 56 83 40 12386 95 62 77 50 8753 60 117 102 43 5774 67 60 80 48 4133 68 89 90 57 1649 61 78 102 34 8555 42 102 100 46 3964 67 88 57 49 5058 82 59 93 23 3065 119 181 71 72 145Demographicsand livabilityEconomiccloutCost City gatewayEase of doingbusinessSustainabilityand the naturalenvironmentScore1,1121,1111,0961,0731,0621,0611,0451,0159979749649559549159038277697617297126736505975785345275155 Abu Dhabi, an emerging city, is among the overall wealth leaders.But that is driven by the oil economy, hence an anomaly forbroad comparison.behind. Yet concentration of wealth reflectsthe inverse relationship. Among the emergingcities, only Shanghai is expected to reachproductivity per worker (as measured by GDP)on a par with mature cities like London, Tokyo,Hong Kong, and Singapore.5The Americancities, as well as Paris, Stockholm, Sydney, andToronto all remain far ahead of emerging onesin terms of wealth. Mature cities retain thespending power, and consumer and corporatedemand, that drive emerging economies. Infact, mutual self-interest would logically uniteemerging and mature cities as one sidecontinues to need the other.

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12 | Cities of Opportunity | PwCYet visions of the future, like all plans puton paper, are made to be altered by theunforeseen. We questioned what mightoccur if the urban world takes different turnsbased on the relative importance of eithercity characteristics (as represented by our 10indicator categories) or the direction of theworld economy. In looking ahead, we focusedon understanding the possible journeys ratherthan the final destinations to provide leadersin government, business, and the communitya pragmatic gauge for their thinking.“What if” scenarios (see pages 32-38) show that:• If cities succeed based on knowledge,technology, and travel connections, themature cities—notably London but alsoParis, New York, and Tokyo—benefit themost. This is a logical connection in an inter-twined urban world: It’s easy to picture thecities that prosper as those with the deepest,broadest, and highest-quality education;those that are “wired” most thoroughly andeffectively for businesses and individuals;and those with infrastructures offering easi-est access to, from, and for the rest of theworld. All these elements are often viewedas leading indicators of urban potential.However, the higher productivity that wouldlikely accompany this reality also depressesoverall job numbers. The results brightennotably, though, if 3 percent greater worldtrade accompanies this scenario, anotherlogical connection. In that case, employmentwould rise by 8 million versus the 2025baseline projection.• If the industrial/information revolutionmoves in the direction in which itshows signs of going and technologicalunemployment kicks into higher gear, allcities suffer losses in jobs and production—which are especially painful set against abackground of sluggish economic growthcoupled with booming urban populations.Emerging cities do worst in all sectors, withBeijing, Shanghai, and São Paulo losing2.4 million, 1.9 million, and 1.3 million jobs,respectively, versus the baseline 2025 projec-tion (see chart on page 35). But Londonand Tokyo also each lose approximately1.1 million jobs.• If protectionism spreads as a way to coun-ter lingering slow growth, all cities will losejobs and production, with Beijing, Shanghai,São Paulo, London, and Tokyo again suf-fering the worst. In fact, the World TradeOrganization and European Commissionindicate that restrictive trade policies are onthe upswing now as nations seek to put theirown houses in order at the expense of theoutside world.• If quality of life drives city economiesas businesses and professionals flock tothe most livable cities, London, Sydney,Singapore, and Paris benefit the most.Cities of Opportunity also ventures beyondthe 27 cities in our study to examine citiesat the edge of change. First, we look atthose emerging giants, the megacities withstaggering growth and an equally impressivechallenge to develop infrastructure and qualityof life at anything near the same speed. Thepopulation numbers are impressive, of course.But the direction is more so. In 1950, sevenof the 10 largest metropolitan areas werein the developed world. By 2010, only NewYork and Tokyo remained on the list alongwith eight developing megacities. Europeancities had vanished. By 2025, according tothe United Nations, the number of megacities(with population over 10 million) will havenearly doubled to 29 from 16 at the turn ofthe century, with 12 of the 13 new ones in theemerging world. (See page 79, “Megacities,megachallenges.”)Anyone who has lived in a big city for long,however, knows that things rarely remain thesame for more than a few years. For betteror worse, change happens.Athens, Dublin, and Dubai are three citiesthat dramatically illustrate the toll of theGreat Recession and the differing paths torecovery. We wondered what lessons mightemerge by comparing them. It turns out thateach city followed its own path into the crisis,managed its own way, and dug out or sank indeeper in its own way. Therein lies “a tale ofthree cities” (see page 88).Mature cities benefit if future success is based on knowledge,technology, and travel connections or strong quality of life. All citiessuffer if technological unemployment or protectionism takes holdin a sluggish economy.The Queen Sofia National Centerof Art Museum in Madrid.

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Interviews track the big themes of urban life:the balance required between collaborationand competition; the need for visionary lead-ers to drive critical transformation; the questto build a virtuous circle of economic, social,and environmental sustainability; the practicaltest of how to meet funding needs; and, thefoundation of any city, safeguarding justice inthe community based on shared respect for lawand order and quality of life. We spoke with:• E.O. Wilson, the renowned scientist,naturalist, and author, addresses thepotential of cities, good and bad, as theywork through humankind’s defining chal-lenge of getting the mix right betweenindividual and collective interest. “What wehave to do,” he argues, “is make cities a lotmore livable. By that I mean, more consis-tent with the fundamental emotional needs,the instinctive needs of human beings.”• Wim Elfrink, Cisco’s chief globalizationofficer, frames the transformative possibili-ties of technology backed up by practicalapproaches to enable progress, such as public-private partnerships and business consortiums.• Bill Bratton, who spearheaded majorcrime reductions in New York and LosAngeles, tells how that is done—streetby street with respect for citizens’ basicquality of life, attention to law and order,and ultimate trust that city dwellers are theones who will step up to safeguard theirown communities.• Peter Chamley digs deep into the practicalchallenges of keeping a mature city upto speed from his hands-on perspective aschief engineer for Arup Group at London’sCrossrail project, New York’s Second AvenueSubway, and many other groundbreakinginfrastructure initiatives.• David Miller, World Bank special advisoron urban issues and former Torontomayor, speaks of Toronto’s ability tosweeten life for many on the cold shoresof Lake Ontario with a recipe that beatshot Tim Horton’s coffee and maple sugardonuts, fashioning success from a founda-tion of economic balance, civility, and socialcohesion. Miller also addresses the practical-ities of city governance in the face of limitedpower and funding.• Andrew Chan, Hong Kong-based deputychairman of Arup, dreams of “creatinga true eco city [with] infrastructure thatworks together in a holistic way so thatenergy, water, transport, and waste are allintegrated.” He also tells of some of the big-gest urban infrastructure challenges in Asia.• Finally, N.R. Narayana Murthy, founderof Infosys and as much a father of India’seconomic miracle as any business leader,takes a clear-eyed look at the challengesand opportunities that face a nationurbanizing at the rate of 20,000 new citydwellers a day. “To bring prosperity to thevast majority of Indians,” Murthy counsels,“we need to enhance our governancesystem, enhance our transparency andaccountability, combat corruption, andenhance our infrastructure.”In the end, many implications arise fromCities of Opportunity 2012 for citygovernments, businesses, and citizens.Our goal remains helping to identify whatworks for cities, framing thought and actionfor leaders charged with public and privatedecision-making, and, by doing so, betteringthe lives of the 3.6 billion or so politai, urbancitizens representing over half the world’spopulation today.If there is a lesson to be drawn from the study,it is the continuing demonstration that citiesface similar challenges and opportunities,and their intertwined economies depend oneach other to prosper. Coordinated dialogueand action around shared goals remainthe most effective order of the day in achallenging time.Learn moreSee www.pwc.com/cities for interactive modelers;videos, podcasts, and full-length versions of theinterviews; detailed data definitions and sources.

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14 | Cities of Opportunity | PwCApproachWhile the cities and variables may change,the research method remains consistentIt should be clear by now, in this fifth editionof Cities of Opportunity, that our annual reportis a continually evolving project, in whichthe only constant is the assurance that bothits data and criteria are as tested and unim-peachable as possible, and that sufficientthoughtfulness is invested to make it useful tocities, their leaders, businesses, and citizensseeking to improve their economies andquality of life. No new report is the same asthat of the previous year simply because everynew report is subject to careful scrutiny andcontinuing improvement.An entirely new future-oriented section, Thecity tomorrow, is the biggest change readerswill notice this year. We built from a founda-tion of Cities of Opportunity methodology andresults, complemented by Oxford Economics’sregional and world models, to develop a 2025baseline projection customized for our 27cities. From that 2025 baseline, we con-structed a “what if” scenario modeling toolsensitive to changes in particular city char-acteristics as represented by our 10 indicatorcategories or the world macroeconomicpicture. In other words, the modeling toolcan reslice the Cities of Opportunity urban pieaccording to the relative importance of citytraits that we measure, or it can make theeconomic pie itself bigger or smaller depend-ing on growth assumptions. Methodologyis presented in The city tomorrow section(see page 20) along with “what if” scenarios.Our foundational study of current perfor-mance reaches 27 cities this year, up from 11cities when we began five years ago. But wedon’t think that the quantity of cities coveredis the most important aspect of Cities ofOpportunity. Rather, it is the quantity andquality of the variables we have added tothe study during those years. That is why wereexamine our methodology every year, andwhy we try to frame our data within a contextthat illuminates the meaning behind theraw numbers.Last year, for example, we explored underly-ing issues such as regional management,education, cityscapes, sustainability, trafficcongestion, and preservation. This year, weare taking an enormous leap forward byprojecting our 27 cities 13 years into thefuture, for indicative forecasts, under severalscenarios, of the global urban outlook in 2025.But we also continue to focus on the pres-ent: “A tale of three cities” reports on Athens,Dubai, and Dublin, all of which have beendeeply affected—each in its own way—by the consequences of the Great Recession.The fundamental criteria governing thisreport’s choices of cities remain unchanging,however. They are:Capital market centers. While many of thecities included are hubs of commerce, com-munications, and culture, all are the financialcenters of their respective regions. This meansthat each plays an important role not onlylocally but also as a vital part of a global eco-nomic network.Broad geographic sampling. Beyond eachcity’s role as a regional, or even global,center of finance and commerce, the 27cities collectively form a representativeinternational distribution.Mature and emerging economies. Fifteenmature cities and 12 emerging ones areincluded this year, with three new cities addedand two removed. At 27 cities, the sample sizeremains small enough to allow for an analysisthat is both deep and broad, but still large—and inclusive—enough to be representative.

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Partnership for New York City | Cities of Opportunity | 15This year’s total of 27 cities is one more thanin last year’s report. More important, we havereplaced two cities with three new ones:Buenos Aires, Kuala Lumpur, and Milan.Italy’s financial (and fashion) center wasadded to enhance the geographic weight ofEurope’s southern tier, to counterbalancethe continent’s northern cities. KualaLumpur joins this year’s report because it is,by general consensus, one of Asia’s mostdynamic capitals and increasingly a majorglobal city. Buenos Aires replaces Santiagoin the Spanish-speaking Southern Cone notonly because of its economic growth but of itscultural vitality and influence as well. Finally,Houston has been dropped from this year’sreport in order to more evenly balance theUS with the rest of the world.We have also revised our indicators, drop-ping one and adding an entirely new one: citygateway. In general, the indicators are con-structed with a robust sampling of variables,each of which has been chosen because it is:relevant; consistent across the sample;publicly available and collectible; current;free of skewing from local nuances; andtruly reflective of a city’s quality or power.(See pages 92-95 for a brief key andwww.pwc.com/cities for a detailed listingof definitions and sources.)Data this year were normalized for factorssuch as relative geography or population inalmost all cases, minimizing the likelihoodof a city doing well solely because of size orhistoric strength. This process eliminated theneed to differentiate between variables thatreflect a city’s raw power (such as numberof foreign embassies or greenfield projects)and the quality or intensity of a givencharacteristic (such as percent of populationwith higher education).The 60 variables, down from last year’s 66,constituting the 10 indicator groups havechanged significantly this year in order todevelop an even more accurate image ofcity success. Indeed, only two indicators—technology readiness and health, safetyand security—remain unchanged fromthe previous year.The most extensive revisions are in transpor-tation and infrastructure, which has seen itsfocus sharpened from nine to six variables(of which only three remain the same);demographics and livability, which has beenrealigned around four variables with theemphasis on livability; and cost, which hasfour new variables. But there are substantivechanges among other indicators as well,including sustainability and the naturalenvironment, economic clout, and ease ofdoing business.Because Cities of Opportunity is based onpublicly available information supportedby extensive research, three main sourcesare used to collect the relevant data:Global multilateral developmentorganizations such as the World Bank andInternational Monetary Fund, nationalstatistics organizations, such as UK NationalStatistics and the US Census Bureau, andcommercial data providers. The data werecollected during the latter half of 2011 andfirst quarter of 2012. In the majority of cases,the figures used in the study refer to 2010and 2011 data.In some cases, national data are used as aproxy for city data. Use of national data tendsto disadvantage the 27 cities in our study,all of which are either national or regionalcapitals of finance and business that tend tooutperform national averages in measuresof socioeconomic advancement. This effectmight be even more pronounced in developingeconomies and economies with larger ruralpopulations. Nonetheless, because consistentcomparisons across all cities are critical toassure objectivity, country-level data wereused when consistent, highly reliable sourcesof publicly available municipal data could notbe used for all 27 cities.The scoring methodology was developed toensure transparency and simplicity for read-ers, as well as comparability across cities. Theoutput makes for a robust set of results and astrong foundation for analysis and discussion.In attempting to score cities based on rela-tive performance, we decided at the outsetof our process that maximum transparencyand simplicity required that we avoid overlycomplicated weightings of our 60 variables.Consequently, each one is treated with equalimportance and, thus, weighted equally. Thisapproach makes the study easy to understandand use by business leaders, academics,policymakers, and laypersons alike.Taking the data for each individual variable,the 27 cities are sorted from the best perform-ing to the worst. The cities are then assigneda score from 27 (best performing) to 1 (worstperforming). In the case of a tie, the cities areassigned the same score.Once all 60 variables are ranked and scored,they are placed into their 10 indicators(for example, ease of doing business or citygateway). Within each group, the variablescores are then summed to produce an overallscore for that indicator. This produces 10indicator league tables that display the relativeperformance of our 27 cities.

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Partnership for New York City | Cities of Opportunity | 19Our cities in 2025From butcher to baker to memory-stick maker;From blue skies to thunderstorms …Our approach to projecting the future liessomewhere between Mark Twain, the Americansatirist, and Charles Goodhart, the emeritusprofessor of banking and finance at the LondonSchool of Economics. Twain famously said, “It’sdifficult to make predictions, especially aboutthe future.”1More recently, Goodhart said ofcentral bank forecasting in today’s uncertainenvironment: “We need to refocus attentionaway from point forecasts to the range ofpossible outcomes, on potentially varyingscenarios and on the need for flexibility (notpre-commitment) to respond to an unknowablefuture.”2We agree with them both.Cities of Opportunity projects the future ofeconomic growth, population, and employ-ment in our 27 cities in a pragmatic spirit.We establish a baseline projection to 2025that assumes a continuation of urban growthbut at a more modest pace than the boombefore the Great Recession. In that environ-ment, emerging cities skyrocket in populationand employment, but mature cities retainmuch higher productivity. With average percapita wealth converging slowly over theforecast period, each will still need the other tobuy and sell products and services—suggestinga continuing, mutual self-interest among ourcities. (See chart on page 22, “The shape of cityeconomies to come.”)Our look at the future also suggests“what ifs” that push the probable envelopetoward the possible. Scenarios investigatechanges in the size of our urban pie throughfaster or slower macroeconomic growth aswell as the same-sized urban pie beingresliced with different winners and losersbased on the relative importance of varyingcity qualities. (See next page for backgroundon the methodology used.)“What ifs” are constructed not as predictorsbut as parameters or signposts for governmentand business decision-makers to consider inthinking and planning. They include scenariosin which:• Knowledge, technology, and travelconnections increasingly drive globalinvestment decisions.• Urban quality of life attracts businesses andpeople and, in turn, fuels progress.• A restructuring alters the long-term employ-ment picture through some combination oftechnological jobs displacement, governmentconstraint, austerity, and a waning ofconsumer spending, with market forcesadding to the downdraft.• Protectionism spreads as a tactic to counterdifficult times.This seems the right time to take a lookat the future of our cities for a number ofreasons. The world has been moving on afairly steady course in economics and financefor some years, often with expectations ofcontinuity or even predictability. But social,political, scientific, and economic forces,all played out against the background ofglobalization and urbanization, suggest thispresumed order may be changing. Standardexplanations do not quite unravel the persis-tence of high unemployment, for instance,or capture the underlying technological trans-formation that shows signs of taking place(see page 34, “What if” technological unem-ployment finally dawns?”). These forcescould play out in many ways that naturallyconcentrate their toll in cities.On the positive end of the spectrum,constructive forces come together in citiesalso, as demonstrated in different ways by allthe cities in our study. The upside potential is1 Baseball player Yogi Berra, physicist Neils Bohr, and movie mogulSam Goldwyn are also widely credited with a version of the adage.2 Charles Goodhart, Financial Times, February 2, 2012, “Longer-termcentral bank forecasts are a step backwards.”New York harbor at dawn.

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were adjusted for the particular urban geogra-phies used throughout Cities of Opportunity.To assess the impact that different Cities ofOpportunity indicators might have on futureeconomic outcomes, we analyzed each sectorto determine “mobile” employment shares orthose jobs or economic activity not serving thelocal market that could most readily be locatedanywhere in the world. That share of mobileemployment is higher in sectors such as hedgefunds, legal services, or manufacturing butlower in areas like healthcare, retailing, andtransport. A locally dependent share wasdetermined in all sectors according to threetranches of high, medium, or low employmentmobility, with adjustments within each tocreate a dynamic scale. (For instance, wecreated a sectoral sensitivity matrix for theCities of Opportunity indicators based onempirical evidence and qualitative input fromOxford’s sectoral economists. This was used toadjust future sectoral growth across the citieswhen scenarios are run in the model.)We considered performance on Cities of Oppor-tunity indicators as signposts of cities’ growthtrajectories, and weighed in relative rankscores into the model. The model also linksindividual sectors to global trade performanceHow it worksThe economic underpinnings of the “what if” scenario toolOur “what if?” scenario tool is designed byPwC and the Partnership for New York Cityworking in conjunction with Oxford Econom-ics to create a forward-looking framework forurban thinking and to challenge preconcep-tions, not to predict what will occur. It wasdeveloped to measure what might happenif Cities of Opportunity indicators were moreor less important in future business invest-ment decisions or if macroeconomic patternschanged to influence the overall urbanenvironment. This, like all scenario tools,depends on input assumptions and underlyingrelationships.The baseline economic forecasts for eachof the 27 cities build from a foundation ofOxford Economics’s global cities, regional,and world models, all updated quarterly.Forecasts are customized to match thespecific urban geographies used in Citiesof Opportunity.enormous and extends over a wide range ofopportunities coming from both the matureand emerging worlds: students, travelers,and tourists increasingly drawn to cities;professional service sectors connecting andtrading across an ever more intertwined envi-ronment; engineers, designers, and buildersgetting infrastructure up to speed with needs;and, of course, the potential that innovationrepresents in urban clusters. Some of human-ity’s greatest triumphs have been achieved byforward-looking cities that align governments,businesses, and citizens for the common good.This will be no less so in future.“If we can make what we have a lot morelivable, we really can develop somethingclose to a paradise ... through rationalityand an understanding of what we really are,”renowned biologist E.O. Wilson tells Cities ofOpportunity. Wilson suggests that anintelligent way to think about the evolvingurban world and the natural one coexistingsustainably is to set aside half the planet forcities and the other half for the rest of life. Atthe same time, we can use the technologieswe possess to build cities and communities insynch with human needs (see condensedinterview on the next page, as well aswww.pwc.com/cities for the full-lengthdiscussion and podcast).In the end, issues of growth, place, people,resources, ambition, governance, collaborationand competition, vision and leadership feedinto any city’s vision of its own future. But nomatter what that vision is, from cultural capitalto manufacturing hub to biotech or informa-tion/communications technology cluster, itwill be challenging to move the needle aheadat a time of straitened financing.To do so, we once more turn to E.O. Wilson—who himself often quotes the Israeli diplomatAbba Eban—“when all else fails, men turn toreason.” This year, Cities of Opportunity turnsto reason early in trying to frame evolvingurban thought and action in the contextof known challenges and probable andpossible directions.Learn moreSee www.pwc.com/cities for videocasts andpodcasts of interviews in addition to the full-length discussions. Detailed background onsources and definitions are also available.1 The sectoral definitions used in this study are consistent with the UK’s 2003 Standard Industrial Classifications (SIC 03), the StatisticalClassification of Economic Activities in the European Community (NACE), and the 2002 North American IndustryClassification System (NAICS).The “what if” scenario tool covers 22 broadsectors1for both gross domestic productand employment. The financial and businessservices sector is split into 10 job subsectors tocapture the nuances of urban labor markets.Published sectoral GDP data are used withestimation techniques selectively filling gapsto complete the dataset. In the absence ofemployment data at a sectoral level, countsof business units are used to make effectivesubsector estimates. The employment data inthe model refer to total employment, that is,self-employed plus employees.GDP data are sometimes unavailable at acity level. Where estimation was needed, citysectoral employment data and metropolitan,regional, or national productivity estimates20 | Cities of Opportunity | PwC

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Induced impactsarising fromdirect and indirectjobs change andtheir associatedconsumer spendingIndirect orsupply-chainimpacts in theform of jobsand GDPDirect change in jobsand GDP compared withthe baseline outlookThree rounds of impacts determine a “what if”scenario’s results:Three rounds of impacts combine to developthe results of an overall scenario. Directjobs change is determined by the sectoralsensitivity matrix and Cities of Opportunityscores in each indicator category. Sectoralproductivity provides an estimate of sectoralGDP change (with the model keeping theoverall level of economic activity static orallowing it to rise or fall depending on themacroeconomic scenario). Supply-chainor indirect effects are calculated usingcity specific input-output tables (derivedfrom national input-output tables and cityemployment structures). Induced effectsare estimated using the direct and indirectimpacts and consumer-spending data.We factored in different urban productivitylevels in determining overall and local cityjob tallies. That is, the total value of eco-nomic activity might remain the same, butjob numbers are adjusted to rise or fall basedon a city’s productivity. The model alsomoves jobs within the Cities of Opportunityuniverse and does not account for competi-tion from cities outside our 27: Shenzhen,say, which is not in our study, taking jobsaway from nearby Hong Kong, which isincluded. We also recognize that a city mayappear to have the right stuff in our model togrow, but if underlying skills or infrastructureare lacking growth may be hampered.HIGH mobilityManufacturingMiningFinancial services• Banking and finance• Insurance and pension funding• Activities auxiliary to financial intermediationBusiness services• Real estate and renting activities• IT and computer related• Research and development• Architecture and engineering• Legal, accounting, bookkeeping• Advertising• Professional, scientific, and technical servicesMEDIUM mobilityLeisure, culture, and otherTransport and communicationsNO mobilityPublic administrationSource: Oxford Economics, Cities of OpportunityLOW mobilityAgriculture, forestry, and fishingConstructionEducationHealthHotels and restaurantsUtilitiesWholesale and retailContinued from previous page:(based on analysis of the historicallyobserved relationships). This allows differ-ent global trade outcomes to be exploredat a city level. In addition, the scenario tooladjusts productivity assumptions across sec-tors and locations and individually assessesdifferent sectoral performance globally orwithin cities. All this allows explorationof alternative economic trajectories andconditions for the 27 cities.The “what if” scenario tool enables Citiesof Opportunity indicators to be flexedindividually or together with other indica-tors in terms of their future importance toinvestment decisions.Partnership for New York City | Cities of Opportunity | 21Will the jobs relocate?Ranking mobility among 22 job sectors from globally fluid to locally rooted

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Mutual self-interestunites developed anddeveloping citiesA number of themes emerge charting thelikely economic evolution of our 27 citiestoward 2025. Foremost, the cities share asmuch interdependence as they do individual-ity—making as strong a case for cooperation toshare in a richer pie as there is for competitionto grab a bigger piece of a poorer one. Our 27cities represent disproportionate economicmuscle today, generating nearly 8 percent ofworld GDP with only 2.5 percent of the popu-lation. Looking ahead to the quarter-century,they will house 19 million more residents,account for 13.7 million more jobs, and churn$3.3 trillion more in GDP if we continue onour current course of modest growth andavert serious economic crises.But the big picture of divided East/Westwealth and quality of life is unlikely to changeunless transformations occur in the way wework and spend globally. Affluence is likelyto remain in developed cities—whose longestablishment, high productivity, and richerincomes tower over developing cities. Thelatter have a mountain to climb to catch up inproductivity (and underlying areas like opengovernance, lack of corruption, and strongerphysical and social infrastructure), evenwhile growing spectacularly in populationand employment.If those improvements occur, employmentpatterns could change dramatically indeveloping cities, cutting labor dependencyand jobs. But that issue may be upon usalready as employment struggles to regainpre-recession levels and as a new phase maybe dawning in the information revolutionwhere less work is required and wealth mustbe shared in a more rational manner amongthe soon-to-be 9 billion of us. Meantime, ourcities are intertwined. As long as the West pos-sesses the time and money to buy goods andthe rest of the world has the labor to create theproducts, symbiosis will continue, each sideneeding the other to prosper and making thecase at least as strong for intelligent urbancollaboration as it is for competition.$73$77 $58 $54 $16 $108$58 $424 $244 $10420 2536912Beijingon New York MexicoCitySeoul Moscow SãoPauloMumbai Tokyo Istanbul Shanghai Beijing0Partnership for New York City | Cities of Opportunity | 23

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24 | Cities of Opportunity | PwCEdward O. Wilson, emeritus professor of entomology at Harvard, hasspent 60 years at the university as a pioneering scientist, thinker, andauthor. Wilson has written 27 books, including the groundbreakingSociobiology that in 1975 placed the social behavior of all animals,including humans, in the context of evolution. He has been awardedthe Pulitzer Prize twice, for On Human Nature and The Ants, a monu-mental study of his first scholarly love. His most recent book, The SocialConquest of Earth, examines the fundamental questions of human lifethrough the lens of man’s basic tension between individual and groupselection. Here, Wilson extends thoughts from a lifetime of work as ascientist to cities and the planet as a whole.E.O. Wilson takes the very longview of cities… and the human potential to “develop something close to a paradise…through rationality and understanding of what we really are”Asked for seven words to describeyourself in a talk at the New YorkPublic Library, you said, “The antscame, spoke, taught, and judged.”What would they say, whatwould they teach, and whatwould be their verdict if theywalked through New York orJohannesburg or Shanghai?I think that if you could get reasonout of what they were doing andhow they were organized, youwould say for them that theycame about through their higherlevel of social organization, whichis one of the very few that everevolved on earth, by altruisticcooperation. They would have toreveal that we evolved in much thesame way and through the samepathway of evolution. We followedthe same rules and we have someof the same basic principles oforganization. Then things beginto differ a great deal. But we reallycannot understand our ownorigins without examiningprehuman origins.Do you think urbanization isprogrammed into our geneticleash and perhaps we’re a millionyears away from being as evolvedin our cities as we might be?I do not. Cities just happen to bethe aggregate of convenience.They’re becoming more and more

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Partnership for New York City | Cities of Opportunity | 25What we have to do is make cities a lot morelivable. By that I mean, more consistent with thefundamental emotional needs, the instinctiveneeds of human beings.necessary for high productivity intechnologically advanced societ-ies, and also becoming a necessityas natural resources, or transpor-tation back and forth betweendwellings and city centers, becomescarcer. All those things conspireto move us into cities. What wehave to do is make cities a lot morelivable, and, by that, I mean moreconsistent with the fundamentalemotional needs, the instinctiveneeds of human beings.What do you think are the ecologi-cal or sociobiological pluses andminuses of an urbanizing world?It all depends on technology. Weneed to arrange cities so they’relivable, and that means adequatetransport in and out and foodchanneled in and waste channeledout, and then within the city,development of living quarterswith sufficient privacy. And afurtherance of a tendency—we’rebeginning to see nicely in NewYork City—of greening the dwell-ings themselves with balconygardens, rooftop gardens, withcreative landscaping everywhere.Then you can have a very livablecity, and I believe then you havethe great advantage, obviously, ofwhat New York has. New York isthe greatest city in the world. It’sthat way partly because of largenumbers of people and a longhistory of wealth, with a class ofthe wealthiest people willing to orwishing to build up the institu-tions that have led to the best ofthe core of New York City today.So there are a lot of advantagesto having a large city if you canorganize it properly.But another great advantage, onethe Germans have already putinto law, is they prevent suburbangrowth out from city and smalltown centers, and the result is thatthey have lots and lots of opencountryside not far from wheremost of the people live. And thatwill become more and morethe case.You have said, “We really don’tknow what on earth we’re doingbeyond our short-term goals.We’re destroying the rest of life.It’s important we keep a separatepart, half of the earth, for the restof life.” Do you think cities shouldbe reserved for us humans, and weset aside the rest of the planet forthe rest of life?I envision a human population,which the United Nations esti-mates if the current estimates arecorrect, stabilizing, we hope,somewhere around nine or 10billion. That being the case, alongwith the increasing urbanizationand, we hope, quality of life foralmost everybody, that then wereally could do what you just sug-gested—have a part for humansand a part for the rest of life.And why is this valuable? It justmakes good sense to leave therest of life alone; that is, protectit enough so that it keeps onevolving the way it has, reachingits own sustainability, its ownbalances for 3 1/2 billion years.And then we can go on with allour own craziness. Urban, sub-urban, in the sky planting spacevehicles to ruin some other planet,whatever things we do—we couldgo on without destroying so muchof life that we eventually destroyourselves or make the planet sounpleasant that we really willwant to go out to another location.Do you say that altruisticallyor functionally, that it’s bettermutually for us and the rest ofthe planet?Both. I think that we owe some-thing to the rest of life. After all,it gave rise to us. We were bornin a biosphere. We arose fromanimals, and we owe the restof life something. And that’s acompletely human instinct or, Ishould say, moral attribute. It’svery much in our self-interest tohave a planet—to continue livingon a planet— that’s balanced,that has obtained sustainabilitythrough, literally, billions of yearsof evolution. … Leave it alone. …Give half of the world to the restof life. Half should be more thanenough when we’ve developedsufficient technology and sustain-ability techniques to give us a verygood quality of life.In Africa, you’re working to savean endangered ecosystem at thesame time Africa is the world’sfastest urbanizing continent.What can be done to manage theinterplay of advancing urbanismand nature?It’s pretty clear what needs to bedone. First, various countries,“There are areas of Central Park thatare pretty close to resembling a naturalenvironment.”

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26 | Cities of Opportunity | PwCsovereign states, have to evolveaway from dictatorships and highlevels of corruption. They oughtto be encouraged or helped tocontinue improving educationand economic growth—althoughAfrica is now also the fastestgrowing in percentage increaseof GDP of any of the continents.How would you relate the urgencyof biodiversity loss to a NewYorker who rides the subway andrarely experiences nature?We’re talking about the need fortechnology and the humanities tobe more democratized and spreadmore evenly, and conservationto be spread more evenly. We’retalking about a city like New Yorkthat could, in due course, clean upa lot of the more obvious defects:the unlovely traffic, the conditionof the poorest parts of it, and soon. And I would remind anyonenot to look down too much onNew York City. There are areas ofCentral Park that are pretty closeto resembling a natural environ-ment. So, with parks in cities,combined with the improvementof the purely urban aspects of citylife, I think you could get a prettylovely city.I know that Chicago is anothergood example of this. Chicagohas what is called its WildernessProgram that 10 or 15 years agostarted to map out all of the emptyspaces—the road edges, the river-banks, the vacant lots, the old andmostly neglected city local neigh-borhood parks. Chicago madecomplete maps of them. And thenit set out to let them come back tothe wild as much as possible, cleanthem up, make biological surveysof them, and start getting kidsand people in to enjoy them, allover Chicago. I think that’s a neatprogram, and every city wouldbenefit by having somethinglike that.You’ve said, “The human conditionis being hung in betweenindividual selection and its con-sequent sin and group selectionand its resulting virtue.” Can wehave a nondestructive relationshipwith the natural world when weourselves seem to be at war withourselves, ranging from mundanedaily greed and shortsightednessto actual wars?That’s a painfully accurate ques-tion. It certainly looks, from all ofthe evidence, that we are eternallyand naturally conflicted. Anyspecies that reaches the humanlevel may—I don’t want to get intoscience fiction but it may—be apeople, but to realize that groupdistinctions, and group competi-tion and individual competitionwithin groups, is just the way weare. That’s what made our species.And we really should try to findthe solutions to our problems thatdo not entail pushing and coursingtoward what one group or othersees as the perfect harmony—a harmonious solution—but,rather, just to abate and dampthe differences between us in amanner that’s based upon humanself-understanding. And that’s notso hard to achieve. It just takes arethinking of the foundations ofhuman science—the science abouthumans. But we don’t really wantto go to one extreme or the other,do we? We stay somewhere in thecenter because it’s that fermentof the center, between the twoopposing impulses, our conflictednature, which makes us creative.It’s in the conflict that we tryto move ahead?I agree. If we can make what wehave a lot more livable, we reallycan develop something close to aparadise. By developing throughrationality and an understandingof what we really are, we can geta very livable planet to stay on.Can there be enlightened citypolicies to address the great fearthat people have in a time ofglobal migration towardnew immigrants?Yes. Look at it the way a geneticistwould. We’re evolving in a way tohomogenize the human genome.Up until quite recently, a very largepart of the genetic differences orvariation in humans were thedifferences from place to place:shall we say, from Stockholm toBeijing. There are a lot of geneticdifferences between thosepeople—and they’re extraordi-narily similar, incidentally—butthey are what differences occurin the human species. That’s thedifference between localities. Butone result of globalization is thatwe’re homogenizing. And nowthe differences between localitiesWe should give half of the world to the rest of life [and half tocities]. Half should be more than enough for us when we’vedeveloped sufficient technology and sustainability techniquesto give us a very good quality of life.conflicted species in that manner.And that conflicted conditionmeans that we are always tornbetween the two impulses of indi-vidual survival and developmentat the expense sometimes ofothers and the nobler, the betterangels of our nature—the productsof group selection—on the otherhand: the group selection thatmade us what we are.So the solution to our problemsis not to define the best religionand try to get everybody into it;it’s not to define the best ideologycertainly, as though there werea perfect ideology that we areevolving; it’s not to expect completeharmony among cooperating

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have to improve educationsystems. We need far bettermethods of teaching. We needbetter incentives for teachers, andespecially to include educationin science and technologybecause we are now enteringa techno-scientific world. Thetechno-scientific revolution is hereand it’s pervading every minuteof our lives. People are not goingto be able to understand the mostfundamental questions about ourspecies—things we used to callphilosophical questions, urgentquestions of reality—we’re notgoing to be able to handle thesethings, particularly dealing withgroup conflicts. That’s the partI like to think of as somethingeverybody could agree on.I myself right now have afoundation that is setting upin partnership with Apple anonline course in biology, whichI hope, and I know this was thegoal of Steve Jobs, will give theopportunity for an education, anare diminishing, and the amountof variation within each localityis increasing. And I’m optimisticto think that the result will be agreater flourishing of genius, ofspecial talents, and it’ll be a muchmore interesting species thefarther along that line we go.Do you think evolution at allpushes us toward the virtuous,toward logic?I don’t think a genetic evolutiondoes. What’ll happen is that it willbe a cultural evolution in whichwe have the same ferment, wehave the same conflicted nature.I think that probably now, insteadof little wars, and battles againstdictators and clashes of differentreligions, we will work out ourenergies in the area where we’vealways dearly loved and exercisedour hottest instincts and greatpassions—team sports. People ina more civilized society will stillbe having all those emotions butit’ll be in a tamer arena. I don’tperceive the possibility of smooth-ing out and pacifying the humanspecies. I think we’ll always beconflicted and we’ll always haveour crazy games and conflicts,but we can ritualize them andmoderate them more, just aswe move toward a more stablepopulation and a more stable,sustainable planet.You’ve said, “We have Stone Ageemotions, Medieval institutions,and Godlike technology. We’lleither settle down as a species orcompletely wreck the planet.We need to evolve to a betterworld order than the currentStar Wars civilization. … Weneed to reignite the 18th-centuryEnlightenment. We now knowenough scientifically to do so.”In the context of cities, please tellme what challenges or issuesyou’d most want to attack in anEnlightenment spirit?I think that we’re quickly comingto an agreement as a nation andas a world, too—and maybe withenough urgency to actually dosomething about it. We reallyinteractive education that can beadapted to classroom techniques,the same education to a kid inParaguay, Angola, Mozambique,or outer Mongolia that you canget in a prep school in Connecticut.We could do that kind of thingwith technology. I like to thinkthat we can make big leaps ineducation, and it’s absolutelynecessary for the future of thiscountry and the world at large.Our hypothesis in Cities ofOpportunity is that strongquality of life forms a virtuouscircle with a strong economy. Ifyou have jobs, you’ll have moreschools; if you have parks, you’llhave more happy people whowant to go to the schools and beproductive. It forms a sort of virtu-ous circle. Does that make sense?It makes complete sense. You’retalking about positive reinforce-ment in the network of activitiesin cause and effect. Another thingthat makes things hopeful is whatthe chemists called autocatalyticreactions. That is to say, when youget a product created by puttingcertain ingredients together—thisis in chemistry—the product itselfbecomes a catalyst. So the reactionspeeds things up, and you getmore and more products like that,and it just takes off exponentially.Final question. How did you feelwhen you learned that Björk,the Icelandic singer, named theworld’s first app album “Biophilia”after your book?I could not be more pleased to beconnected with a rap operation.That’s funny.This conversation has been sopleasant for me, I hate stopping.Learn moreA podcast of this condensed conver-sation is available at www.pwc.com/cities, as is a full-length print versionof the entire discussion.E.O. Wilson in Gorongosa National Park, Mozambique.

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28 | Cities of Opportunity | PwCThe 2025 baseline scenarioOur cities weave a surprising tapestry of jobsOur 27 cities currently produce 8 percent ofthe world’s wealth despite housing only 2.5percent of its population. In looking towardthe future, Cities of Opportunity assumed acontinuation of growth to quarter-century butat a more modest pace than during the boomyears before the Great Recession. This outlookrepresents good growth in the face of currentchallenges but no return to the high levels of afew years ago for a number of reasons, notablyincluding the large overhang of debt in thedeveloped world.Building from this outlook, we developed our2025 baseline scenario as the foundation forall “what if” projections. The baseline showsthat by 2025, 19 million more people will beliving and 13.6 million more working in ourcities. The 27 cities will generate an additional$3.3 trillion in gross domestic product.Even with growth projected to be strong inemerging cities, Western customers are notforeseen borrowing and spending as in thepast, depriving the emerging world of keycustomers who could supply the wealth tobuild their own cities—currently gaining40,000 people a day in China and 20,000 inIndia, to cite only two in the staggering arrayof statistics on urban growth in Asia, Africa,and Latin America. (See pages 78-91, Cities atthe edge). But consumers from mature citieswith higher relative wealth and per capitaproductivity will still be needed by emergingcities to buy their goods and services. In short,both families of cities, mature and emerging,remain in it together.Broad brushes of this general picture areknown. However, when we look closely atindividual cities and consider the differentgears in the engine needed to continuesocial and economic prosperity, shadings ofmeaning come into play that are relevantto government, business, and communitydecision-makers.What exactly do all those people in Shanghaior New York or Milan or any of our citiesactually do to support themselves, to drivethe economy from day to day, and to continueboth the upkeep and innovation that assuresfuture well-being?The evolving percentage of employment by sector—emerging and mature cities2012 and 2025*Business services include:Real estate and renting activitiesIT and computer-relatedResearch and developmentArchitectural and engineeringLegal, accounting, bookkeepingAdvertisingProfessional, scientific, andtechnical services**Financial services include:Banking and financeInsurance and pension fundingActivities auxiliary to financialintermediation0% 10% 20%MiningAgriculture,forestry, and fishingUtilitiesHotels and restaurantsFinancial services**HealthConstructionEducationPublic administrationLeisure, culture,and otherTransport andcommunicationsManufacturingWholesale and retailBusiness services*Source: Oxford Economics, Cities of OpportunityEmerging20122025 Mature20122025

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Partnership for New York City | Cities of Opportunity | 29Each city in its own right is a highlycomplex ecosystem. The jobs at the heartof a functioning city typically turn out to bein retail, healthcare, public administration(or government), and business services—a diverse and fundamental cross-sectionneeded to make a city run. At the same time,the bills are paid by exportable manufacturedgoods in emerging cities and globallytradable professional and financial servicesin mature ones.Our top two employment sectors, businessservices and wholesale and retail, account fora third of all jobs in 2012. This rises to 36.3percent in 2025. Business services—includingreal estate, IT, and computer-related work,architecture and engineering, advertising,legal and accounting, and other professional-40 -20 20 40 60 80 100-40-35-30-25-20-15-10-505101520253035%Changeinmanufacturingemployment% Change in manufacturing GDPSource: Oxford Economics, Cities of OpportunityMatureEmergingSize of bubble = Manufacturing GDP 2012 (US$, 2012 prices)Abu DhabiSão PauloKuala LumpurBeijingMoscowShanghaiSingaporeMumbaiStockholmIstanbulSan FranciscoLos AngelesTokyoMilanBerlinMexico CityHong KongMadridLondonNew YorkParisSydneyTorontoChicago SeoulJohannesburgBuenos AiresManufacturing employment has been shifting from West to EastChange in manufacturing employment vs. Change in manufacturing GDP (2004-2012)Some emerging cities are beginning to diversify from reliance on manufacturingChange in manufacturing employment vs. Change in manufacturing GDP (2012-2025)20 40 60 80 100 120 140 160-30-20-100102030405060 Abu DhabiBeijingLos AngelesSão PauloSingaporeJohannesburgIstanbulMoscowMexico CityMumbaiKuala LumpurToronto%Changeinmanufacturingemployment% Change in manufacturing GDPSource: Oxford Economics, Cities of OpportunityMatureEmergingSize of bubble = Manufacturing GDP 2025 (US$, 2012 prices)LondonShanghaiMilanChicagoMadridParisSan FranciscoSydney Hong KongBerlinSeoulStockholmTokyoBuenos AiresNew Yorkor technical services—tend to be moredominant in developed cities with sophisti-cated needs. Wholesale and retail accountfor more jobs in emerging cities with a higherconcentration of small stores and loweroverall productivity.Manufacturing plays strongly in the mix aswell, employing the third most people, againdisproportionately stacked toward emergingcities. However, as emerging cities grow inaffluence and sophistication, they are diver-sifying away from manufacturing (see chartsbelow). Mature cities, meantime, engagedin trying to build balanced economies andtaking advantage of idled factories andderelict waterfronts, are often encouragingentrepreneurial manufacturing.Those working in the very guts of the citycome in fourth and sixth overall in terms ofgenerating jobs. This includes the transportand communications workers, at 9.2 percentof jobs, who are behind the scenes as therest of the city moves about, and the publicadministrators in city halls and city parks,whose 6.8 percent of overall jobs are often nowthreatened by austerity budgets. Workers inthe leisure and culture segment account for 6.9percent of jobs, fifth overall in 2012, with allour cities being major business travel and touristdestinations as well as entertainment hubs.All in all, well-functioning city economiesdepend on job sectors fitting together handin glove. Supporting services that keep citieschurning from day to day, from the glamorousContinued on page 39The role of manufacturing continues to evolve